Although bankruptcy is an idea that often comes to the minds of most consumers first, this is an option that many Americans would prefer to avoid if possible. The good news is that there are several alternatives to help consumers get out of debt fast.
Four Ways to Get Out of Debt Fast:
1. Paying more towards your debts each month is an option that may not seem possible for some, but for those of you who are truly committed to get out of debt fast you may be able to work out a monthly budget that allows you to pay more towards your debt than before. This will not only reduce the principal balances more rapidly, but it will significantly cut down what you would otherwise pay in interest. It is usually best to focus on paying down the creditors with the highest interest rates first, while leaving those with the lowest interest rates for payoff last.
2. Another way to get out of debt fast, or at least pay the debt off more quickly, is to simply contact one’s lenders and ask for a lower APR. While this method does not always work, it never hurts to try. Some consumers who have been able to stay current with their monthly payments might be able to talk their way into a more favorable rate. If a creditor knows that you have the opportunity to transfer your balance to another lender, they are likely to try and keep your business.
3. Speaking to a credit counselor, who can suggest a debt management plan that could help you pay off your debt within four to seven years, is another option. Although this method is not as quick, many counselors make consumers devote considerable time to a financial education process that will also help draw up a sound financial budget and eliminate unnecessary expenditures to further chip away at their debt. In a credit counseling program, consumers will pay back every dollar of the principal they owe, albeit it at a lower interest rate.
4. Debt settlement is the process of negotiating with creditors to achieve a payoff amount that is a substantial reduction to the current balances that are owed. Creditors are very willing to negotiate on debt balances that are in arrears, because if a consumer were to file bankruptcy, they stand to get nothing. In order to succeed in such a program, consumers need to diligently save the funds that are required to make settlements, which typically run around 50 percent of the total current balances and last between 24 to 48 months.
When you are looking for the best way to get out of debt fast, you should explore all of your options and carefully consider the pros and cons of each process. Always make sure to do your due diligence on the companies offering the various solutions. While no reduction process is going to be easy, there are great companies that can help you get through a tough spot.